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NPR News

September 25, 2007

Essay: Perfect Storm - 9/25/07

Economist Patrick Anderson knows something about disasters. He’s a former state budget official who was at the World Trade Center on September 11 and barely escaped with his life.

He is a cautious man not given to wild exaggeration. But yesterday, when asked about what‘s happening now, he told the Detroit News what was upon us was “nothing short of a disaster for Michigan, if you combine the strike with a government shutdown.”

“It really is the perfect storm,” he said.

Who could have imagined this? The worst breakdown of Michigan state government in half a century combined with an auto strike right when the state and the industry can least afford it.

Native Detroiter Lily Tomlin years ago had a line that sums it up exactly. “No matter how cynical you get, you can’t keep up.”

What’s happening now seems like a ghastly parody of the Michigan of my youth. There were auto strikes back in the 1950s and 60s, some of them long ones. They were hard on the workers, and the company being struck had to absorb losses.

But when it was over, everyone went back to work with better contracts, and the automaker soon rebounded, both in profits and market share. After all, a Chevy guy was a Chevy guy.

He was highly unlikely to buy a Ford, even if he had to keep the old hunk of tin running a few more months. And vice-versa.

As for buying foreign, give me a break. Foreign cars meant an original Volkswagen beetle. Haul the family around in that? I don‘t think so. There hasn‘t been a nationwide auto strike in decades …

Until now.

Once again, autoworkers have thrown down their tools and struck the nation’s biggest automaker, as they did in September 1970. But it is a different world. There are now seventy-three thousand United Auto Workers union members who work for GM. Back then, there were more than 425,000.

That strike lasted for more than two months, and ended in part because shareholders were horrified that GM posted a third-quarter loss for the first time since 1946. Today, our domestic automakers have been losing billions every year.

More than half the cars sold in the nation are made by foreign corporations. Almost half the nation’s auto workers are not UAW members today, They work for companies like Toyota and Honda.

Every day this strike lasts means more market share for those companies, and a few more sales lost by a stumbling giant that has been losing market share steadily for more than thirty years.

Every day this strike lasts means less money for the state of Michigan, which is so strapped for cash the government may shut down at the end of this week. In fact it will, if our squabbling legislators can’t agree to raise taxes.

Our past is dying and threatening us with a stillborn future. And if you aren’t deeply worried, you aren’t paying attention.

Andy beat me to commenting on the elimination of one half of the presumed "perfect storm."

Andy is also correct to point out that the other half of the supposed "perfect storm" equation might be a lot harder to solve than the GM strike. (Arguably, many more billions were involved in the GM dispute, but of course both the workers and the management at GM operate under a sense of economic reality that is sorely lacking in the public sector.)

But a greater point is this -- the woeful claims of a "perfect storm" of twin economic disasters for Michigan appear to have been greatly exaggerated, at least as to the GM strike. Might it also be the case that the woeful claims that only large tax increases can save Michigan's public sector and the state's economy as a whole? Maybe what Michigan state government needs to recover is what GM is doing to recover; a leaner workforce, and more individual responsibility and ownwership of social costs like retirment and healthcare. And a stern eye on the bottom line.

The problem is that nobody has been willing to talk about SPECIFIC cuts, preferring instead to speak in unproductive generalities.

Now it appears that there will be a rush to settle a budget that should have been the subject of reasoned discussion.

That's bad policy and if we can't have elected officials who can discuss things with an eye on the clock, that begs the question in my mind of "What good are they?"

I don't think anyone is claiming that large tax increases are required - merely revenue that is sufficient to the duties we expect the state to perform.

Schools, public safety and providing a social safety net - that's what I would submit is required and desired by the overwhelming majority of Michigan's citizens.

To equate the settlement of a strike over a few tenths of a percentage point with the resolution of a massive structural deficit that has been building for a decade seems to me to be more than a little disingenuous.

Believe me, if this stalemate could be settled by a simple cut here or there or an economic parlor trick, this legislature and Governor would have jumped at it.

Now is the time for difficult choices and courage, something they have shown precious little of.